Del's and Rodney's are two plumbing services in a gentrifying area of South EastLondon. Within the area they service, the two firms operate as a duopoly andtogether serve one hundred percent of the available local market. One of their keylines of business is visiting customer's homes to install a new shower rail. A studentproject has been investigating the local plumbing business and has estimated thefollowing information for Del's and Rodney's:Total demand for new shower rails per week is given byP = 200 - 4QWhere Q is total market demand and can be divided between Del's (qd) andRodney's (qr) such thatQ = qd + qrAssuming that the marginal cost of serving an extra customer is £40 for each, andthat marginal revenue for Del is given byMRd2008qd - 4qrAnd marginal revenue for Rodney is given byMRrThen2008qr - 4qd8CONTINUED a) Calculate the number of shower rails each will install per week and the price theywill charge for installation.b) Explain briefly why it would be better for consumers if Del's were able to knowhow many visits Rodney's would make in a week before setting its own output.

In the Cournot competition model, each firm assumes that its competitors' output will remain…

a) Calculate the number of shower rails each will install per week and the price they will charge for installation. b) Explain briefly why it would be better for consumers if Del's were able to know how many visits Rodney's would make in a week before setting its own output.

a) Calculate the number of shower rails each will install per week and the price they will charge for installation. b) Explain briefly why it would be better for consumers if Del's were able to know how many visits Rodney's would make in a week before setting its own output.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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